The Death Of The Cookie

Over the past several months, we’ve written a fair amount about the “death of the cookie,” and how internet giants like Microsoft, Google, and Apple are all working on their own means of tracking users across the internet.

But there’s a distinction to be made when discussing the decline of cookies, and it’s one we often fail to make. It’s an important distinction, because the death of the cookie could set in motion a redistribution of wealth in the adtech business — in favor of the already rich.

Cookies are the small pieces of computer code that track people’s activity across the internet. But there are two kinds of cookies: first-party cookies and third-party cookies.

If, say, you visit the New York Times and receive a Times cookie, that’s a first-party cookie.

But if you visit the Times after visiting a shopping website, and you come dragging a bunch of those advertisers’ cookies, then those are the so-called third-party cookies. They are easy to delete, easy to avoid, and less functional (for advertisers) in an environment that also includes traffic on cookie-free mobile devices.

As of now, third-party cookies don’t work on Apple’s Safari browser, and they’re turned off by default in Mozilla Firefox, as well as on iPads and iPhones. Microsoft’s Internet Explorer signals “do not track” for third-party cookies. In addition, many people clear their cookies manually or set their browsers to delete all cookies every thirty days. The result is that the internet’s pre-eminent tracking tool is becoming less and less comprehensive to the point of not being useful anymore.

James Lamberti, vice president of the device recognition firm AdTruth, says the upshot here is that the data companies get from these first-party cookies will be of much higher value as the third-party cookie becomes obsolete, and members of the online advertising ecosystem who don’t have this first-party data could be left out in the cold.

While a small blog is dependent on third-party cookies to help tailor its ads to the users who visit it, a large publisher like the New York Times might have a vast trove of first-party data on its users and their interests based on which stories they’ve clicked on in the past.

“All of this is creating a situation where performance advertisers — like Netflix, big retailers, and Expedia — as well as publishers — which can be anything from a game developer to News Corp — are able to assert themselves again in a more powerful position because they own the relationship with the consumers,” Lamberti said in an interview.

As a result, Lamberti says third parties like data management platforms and advertising exchanges will need to pivot to add value to the relationship between advertisers and publishers, otherwise they’ll be cut out entirely. At AdTruth, Lamberti works to offer clients an alternative to cookie-based targeting by identifying users’ individual devices and combining that ID with client data to develop audience profiles.

“The good is that, yeah, if you’re a News Corp or a CNN or those types of players, even like a Yahoo or an eBay, hopefully you’re going to be in a position to protect your margins and re-assert yourself having learned from the last few years,” Lamberti said. “On the other hand, it creates a situation where you could have a couple of players, namely Google and Facebook, just take over and have so much power where it’s not good for the industry.”

This article was written by Aaron Taube (ataube@businessinsider.com) from Business Insider and was legally licensed through the NewsCred publisher network.

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